Executives should not be caretakers but leaders


This article, Get the Strategy You Need — Now, by Michael Birshan, Martin Hirt and Kurt Strovink, Harvard Business Review, November 20, 2013,  highlights the fact that most executives do not understand their business. To be more precise, many executives are unable to identify the one asset the company owns or controls that gives it a competitive advantage in the market(s) in which they operate thus making them process and/or risk managers instead of leaders.

An analysis of any business will lead you to identify its origins in an asset that gave it a competitive advantage. The owner used this asset to build a product or service the market wants to consume and spends some of that value creating process on managing the risks. As the business matures and then declines many executives try to sustain the business by optimizing process and/or managing risk effectively reducing investor returns when they should divesting. In more tragic cases, these executives are blindsided by new and disruptive technologies that make the business into an overnight dinosaur.

Executives, no the whole company, needs to focus on the asset that provides the competitive advantage and work to maximize returns on that asset. I call this approach the ROKC, Leadership built on the Return On Key Component; where the key component is the asset described above. It works marvelously at keeping the business aligned and focused, and maximizing returns. Try it out.

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